July 2018 Bid Protest Roundup

Protests and LitigationThis month’s roundup discusses three noteworthy decisions from the Government Accountability Office (GAO) covering timeliness, premature claims, and competitive range exclusion notice, and one decision from the Court of Federal Claims regarding third-party intervention. These cases serve as important reminders for protesters and awardees.

Government Accountability Office

1. CWIS, LLC, B-416544, July 12, 2018 – Protesters must file by 5:30 p.m. through the Electronic Protest Docketing System (EPDS) to be timely.

CWIS, LLC protested a sole-source justification issued by the Department of Housing and Urban Development (HUD) to enter into a year-long contract with P.K. Management Group, Inc. (PKMG) for field service management services. GAO dismissed the protest as untimely.

Rule

GAO implemented its new bid protest e-filing system on May 1, 2018. All protests must now be filed through the Electronic Protest Docketing System (“EPDS”), unless they contain classified material. The regulations implementing EPDS specify: “[a] document is filed on a particular day when it is received in EPDS by 5:30 p.m., Eastern Time.”

Background

On June 19, 2018, HUD posted a justification and approval document on fbo.gov citing unusual and compelling urgency as the justification for the sole-source procurement.
On Friday, June 29, 2018, at 5:29 p.m., Eastern Time (one minute before the closing time for submission of protests that day before the weekend), counsel for CWIS attempted to file this protest using EPDS. The filer’s attempt was unsuccessful. At 5:31 p.m., counsel for CWIS contacted GAO by email to advise that the attempt to file the protest using EPDS had been unsuccessful. At 5:46 p.m., counsel submitted the protest by email to the GAO protest inbox.

GAO concluded that because CWIS did not submit its protest on June 29 until 5:46 p.m., that did not constitute a “filing” until the following business day, Monday, July 2.

Takeaway: Plan ahead. It can be time consuming to create a user account in EPDS, submit all required information, and pay the $350 filing fee. Therefore, filers should avoid waiting until the last minute to file. In addition, attorneys can create a user account even before a protest needs to be filed, thus saving this step in the process. Further guidance on how to use GAO’s e-filing system is available here.

2. Deque Systems, Inc., B-415965.4, June 13, 2018 – Finding protester’s corrective action pre-award protest premature.

Here, Deque Systems, Inc. challenged the proposed corrective action by the Department of Veterans Affairs (“VA”) in response to Deque’s prior protest. Specifically, Deque alleged that the agency’s corrective action was improper because the other offeror was not a small business eligible for award and the other offeror had an organizational conflict of interest (OCI) that the agency had not addressed. GAO dismissed both protest grounds as premature because they were brought before the agency rendered a new award decision.

Background

The VA issued a request for proposals (RFP) for Section 508 program scanning and services, which requires that federal agencies must make their electronic and information technology accessible to people with disabilities. The RFP stated that the accessibility services contract was set aside for small businesses and that the award would be made on a best value tradeoff basis.

Both Deque and Level Access submitted proposals in response to the RFP. The agency subsequently notified Deque that Level Access was awarded the contract. Deque filed an initial protest with GAO challenging the agency’s award decision on multiple grounds, including that the agency failed to investigate, mitigate, or resolve potential OCIs of the awardee. Deque also filed a size status protest with the Small Business Administration (SBA) alleging that Level Access was not a small business and was thus ineligible for award.

The SBA concluded that Level Access did not qualify as a small business under the procurement at issue.

GAO conducted an outcome prediction alternative dispute resolution (ADR) conference, during which she advised that it would likely sustain the protest based on the agency’s evaluation of Level Access’s past performance. The VA subsequently advised that it would take corrective action in response to the protest. The agency stated that this action would include reopening the evaluation for the limited purpose of reassessing Level Access and Deque’s past performance proposals, presenting new past performance evaluation reports to the Source Selection Authority (SSA), and allowing SSA to render a new award determination based on the revised past performance evaluations.

Based on the agency’s proposed corrective action, GAO dismissed the protest. The protester objected to the dismissal of the protest, arguing that Level Access was not eligible for consideration in the procurement because it did not qualify as a small business concern for the applicable size standard. In its decision, GAO advised Deque that its objections to the corrective action raised new protest grounds that could only be challenged in a separate protest.

Protest

Deque filed the instant protest alleging that the agency’s corrective action was improper because it was continuing to include an ineligible offeror in its reevaluation. For the purposes of this procurement, SBA found Level Access to be an other-than-small business. Therefore, Deque argued that the only reasonable corrective action open to the agency was to exclude Level Access from further consideration and reevaluate Deque’s proposal for contract award. Additionally, Deque alleged that new facts had emerged to establish that Level Access had an impermissible OCI that the agency had not addressed.

GAO stated that “[a]s a general matter, the details of corrective action are within the sound discretion of the contracting agency, and an agency may reasonably limit the scope of proposal revisions, provided such limitation is appropriate to remedy the procurement impropriety.” GAO explained that “in those instances where the agency’s proposed corrective action alters or fails to alter the ground rules for the competition (i.e., aspects that apply to all offerors), we have considered a protester’s challenge of such to be analogous to a challenge to the terms of a solicitation, thus providing the basis for protest prior to award.” On the other hand, when “the agency’s proposed corrective action does not alter the ground rules for the competition,” GAO considers “a protester’s corrective action preaward challenge to be premature.”

Here, GAO found that Deque’s protest challenging the agency’s consideration of Level Access’s proposals was premature because the agency’s decision to reevaluate Level Access’s past performance proposal would not change the ground rules of the competition. Therefore, GAO dismissed Deque’s protest but stated that “[i]f Deque is not selected for award, it may raise its challenges to the agency’s reevaluation at that time.”

Similarly, Deque protested that new facts established that Level Access had an OCI that the agency had failed to properly address. GAO stated that, “[a]s a general rule, a protester is not required to protest that another firm has an impermissible OCI until after that firm has been selected for award.” However, when a protester is aware of the facts giving rise to a potential OCI and the protester has been advised by the agency that it considers the potential offeror eligible for award, “the protester cannot wait until an award has been made to file its protest of an impermissible OCI, but instead must protest before the closing time for receipt of proposals.”

Here, the VA had not notified Deque that it had considered and resolved the new OCI concerns regarding Level Access. Therefore, GAO found that Deque’s allegations regarding Level Access’s potential OCI were premature because Level Access might not be the eventual awardee, either because it lost the competition, was found ineligible for award under the small business set-aside procurement, or was found to have an impermissible OCI. As a result, GAO dismissed the protest.

Takeaway: Except in limited circumstances (such as proposed corrective action that alters the ground rules for the competition or an agency’s indication that it has reviewed an offerors potential OCI and found it permissible), pre-award protests are likely to be dismissed as premature. However, the penalty for a premature protest still pales in comparison to the penalty for an untimely one.

3. NTT DATA Services Federal Government, Inc., B-416123, June 20, 2018 – Highlighting different treatment of competitive range exclusion notice under task order “fair opportunity” competitions under FAR Part 16 and discussion procedures under FAR Part 15.

NTT DATA Services Federal Government, Inc. (NTT Data) protested the award of a task order issued by the Department of Education to International Business Machines Corporation (IBM) for information technology (IT) support services. The request for quotations (RFQ) was one of six solicitations issued by the agency to meet its IT requirements under the portfolio of integrated value oriented technologies (PIVOT) program. The protest concerned a RFQ issued to acquire IT hosting of applications, data, and IT systems services, and is referred to as the PIVOT H solicitation. A related protest concerning PIVOT I was discussed in last month’s bid protest roundup.

GAO dismissed the protest allegations regarding the evaluation of proposals because NTT Data was not prejudiced by the evaluation errors allegedly committed. Of particular note in this protest, however, was GAO’s discussion concerning its decision to deny NTT Data’s allegations that the agency engaged in unequal discussions based on the failure to inform NTT Data that it had been excluded from the competitive range.

Competitive Range Determination

NTT Data protested that the agency erred because it engaged in additional rounds of discussions with IBM and another offeror (Offeror A), but not with NTT Data. NTT Data argued that this was improper because the agency never made, or at least never informed NTT Data that it had made, a competitive range determination.

GAO dismissed NTT Data’s argument, finding that the agency properly established a competitive range that did not include NTT Data before engaging in the additional discussions.

The task order competition at issue was conducted under the firm’s multiple-award indefinite-delivery, indefinite-quantity (“IDIQ”) contracts. The RFQ advised offerors that the agency was not conducting the procurement under Federal Acquisition Regulation (FAR) Part 15, but was instead conducting the procurement under the “fair opportunity” requirements of FAR § 16.505.

If an agency wishes to establish a competitive range, FAR § 15.306(c) requires the contracting officer to “establish a competitive range comprised of all of the most highly rated proposals.” FAR § 15.306(c)(1). If the CO “decides that an offeror’s proposal should no longer be included in the competitive range, the proposal shall be eliminated from consideration for award” and the CO must provide the unsuccessful offeror with written notice of the decision. FAR § 15.306(c)(3). Finally, FAR § 15.306(c) provides that “[o]fferors excluded or otherwise eliminated from the competitive range may request a debriefing.” FAR § 15.306(c)(4).

FAR § 16.505(b), however, states that the competition requirements outlined in FAR subpart 15.3 are inapplicable to task order competitions such as this. Therefore, GAO concluded that the agency effectively established a competitive range including the offerors that the agency determined had a reasonable chance for award, despite not informing NTT Data or allowing it to request a debriefing.

Specifically, GAO noted that the CO concluded that further negotiations with NTT Data and another offeror (Offeror B) would not be beneficial or likely to result in an award given the technical issues and significant price differences between the excluded offerors and the offerors included in the competitive range. Therefore, it was reasonable for the agency to only enter further negotiations with IBM and Offeror A.

Although the agency did not provide NTT Data with contemporaneous notice of its elimination from further consideration, or afford NTT Data an opportunity to request a debriefing at the time, those procedural requirements are not applicable under task order “fair opportunity” competitions per FAR Part 16. GAO therefore denied the protest.

Takeaway: This case is significant because it highlights the different treatment of competitive range exclusion notice under task order “fair opportunity” competitions under FAR Part 16 and full-blown discussion procedures under FAR Part 15. Procedural safeguards such as prompt notice of exclusion from the competitive range and the opportunity to request a debriefing simply do not exist under FAR Part 16.

Court of Federal Claims

1. KGL Food Service, WLL v. United States and ANHAM FZCO, No. 18-823C, e-filed July 13, 2018 – Court declined to allow non-offeror to intervene in protest because it lacked a direct and legally protectable interest in the litigation.

Although Agility DGS Logistics Services Co. KSC(c) (Agility) did not submit an offer in response to the solicitation challenged in this protest, it sought to intervene in KGL Food Service, WLL’s protest. The solicitation was issued by the U.S. Defense Logistics Agency (DLA) and sought food distribution services overseas. KGL was the initial awardee, but two unsuccessful offerors challenged the award before GAO, and GAO recommended corrective action. In the Court of Federal Claims (COFC) protest, the plaintiff challenged the corrective action taken by the agency.

Agility filed a separate bid protest with the COFC relating to the same solicitation. Agility failed to submit an offer in response to the original solicitation because it was suspended at the time DLA accepted offers. In its protest, Agility argued that, if the agency takes corrective action, it must allow new offerors to compete for the award.

In its motion to intervene in the present protest, Agility argued that it should be allowed to intervene as a matter of fairness. Agility stated that it did not seek to actively participate in the case; instead, it sought to intervene in the present protest to access the record and protect its own interests.

Intervention as of Right

The court began by analyzing Rule 24 of the Rules of the U.S. Court of Federal Claims (“RCFC”), under which the court may allow a party to intervene as of right, or permissively. Rule 24 states in relevant part:

On timely motion, the court must permit anyone to intervene who . . . claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest.

The court noted that establishing a right to intervene requires that: (1) the motion be timely, (2) the movant must claim a “legally protectable” interest affected by the case, (3) the interest’s relationship to the litigation must be “direct and immediate,” and (4) the movant must demonstrate that the interest is not adequately addressed by the government’s participation in the litigation.

The court focused its attention on the second and third requirements: whether Agility possessed the requisite legally protectable and direct interest in the litigation to support its intervention. Agility argued that its interest in the bid protest was the opportunity to be an offeror under the solicitation and that its interest was direct because a decision to reconsider the agency’s corrective action could impact Agility’s claim that any corrective action must allow new offerors to compete for award of the contract.

The court concluded that Agility, as a non-offeror in the procurement, lacked any legally protectable interest in the outcome of the bid protest. Furthermore, the court stated that Agility’s argument that a corrective action would include new offerors was too speculative to qualify as a direct interest in the bid protest because if the court determines in the bid protest that corrective action was inappropriate, then Agility would not lose any rights or opportunities that it currently possesses.

Without a direct and legally protectable interest, the court concluded that Agility could not intervene as of right.

Permissive Intervention

Alternatively, the court has broad discretion to permit a party to intervene. Rule 24 provides, in relevant part, “[o]n timely motion, the court may permit anyone to intervene who . . . has a claim or defense that shares with the main action a common question of law or fact.”

The court concluded that Agility failed to demonstrate that it had a claim or defense that shared with the bid protest a common question of law or fact as required by Rule 24; therefore, permissible intervention was inappropriate.

Takeaway: To intervene in a bid protest, a party must have a direct and legally protectable interest affected by the case. Third parties that failed to submit offers in response to an initial solicitation cannot later intervene in an awardee’s protest of the procuring agency’s corrective action.

*Victoria Dalcourt is a summer associate in our Washington, D.C. office and is not admitted to the bar.